What are we missing in risk management?

Abstract

This paper addresses five possible ‘blind spots’ in the current practice of risk management. These are: (1) the ‘divinity of the gods’ — the inability to criticise senior management; (2) the ‘rush of herds’ — the inability to project and predict mass delusions and hysteria; (3) ‘black swans’ — the failure of models to anticipate outlier events; (4) ‘the error of success’ — the human inclination to think that current success will repeat itself; and (5) ‘academic pomposity’ — the regression towards intellectual obscurity among academic writers.